Spanish Language Stack Exchange is a question and answer site for students, teachers, and linguists wanting to discuss the finer points of the Spanish language. It's 100% free, no registration required.

which as far as I understand, means that a single gypsy woman sat down at the edge of the village and installed the telescope at the entrance to the gypsy camp. But if a single gypsy woman sat there, why is "Sentaron" and not "Sento" used?

It is sentaron and no sentó because the writer is refering to the rest of the gypsies, not the woman. The other gypsies seated the woman in one side of the camp, while the telescope was put in the other side.

It is the same as:

Los padres sentaron al niño en la silla.

The parents took the child and made him sit down in a chair. The child is the person that sat down, but the parents ordered it.

The analysis is as itziki explains. The problems you find with such analysis are rooted in the fact that –as you might already know– in Spanish you are able to omit the subject.

However, notice that you don't need the previous sentences to find your conjugation logically consistent.

For instance:

Ya cerraron la tienda.

Why cerraron? Who closed? The answer is who cares. It's an impersonal form, quite similar to the passive voice, in which you don't really care who perform the action. And that impersonal form is the third person in plural – also available in English, actually.

Moral: If you don't find that consistence with the subject, the subject was mentioned before (as in itziki's asnwer), or it doesn't matter who performs the action, like here.